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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators

Agile Regulation -- CFTC Chairman Chris Giancarlo

Barefoot Innovation Podcast

Agile Regulation -- CFTC Chairman Chris Giancarlo

Courtney Cole

I’m calling today’s show “agile regulation.” I know that sounds like an oxymoron, but today, agile regulation is actually on its way.

Financial regulators all over the world are realizing that they will have to update their tools, digitize their information and, above all, speed up, to keep pace with the exponential rate of technology change in the industry they regulate. In the United States, the leading voice in this new vision has been our guest today -- the Chairman of the Commodity Futures Trading Commission, Christopher Giancarlo. This is the second time we have had Chairman Giancarlo with us, and we are posting this one right before he leaves office.

This conversation builds on the first. I think it might be the most interesting and thought provoking discussion we’ve ever had on Barefoot Innovation.

The agency’s name -- the Commodity Futures Trading Commission -- may not clearly conjure its role in our economy as the regulator of derivatives. That responsibility puts the CFTC at the forefront in addressing mold-breaking innovation in finance, and Chris Giancarlo has, perhaps more than any US regulator, been thinking deeply about the challenge that regulators face as a result. Late last year he gave a speech at Georgetown University Law School for FinTech Week, called Quantitative Regulation, Effective Market Regulation in a Digital Era, raising themes that we discussed in depth in our conversation.

We talked about the need to digitize regulation. We talked about the need for new data analytics and artificial intelligence -- he tells a great story on how algorithms are changing the marketplace, and how the CFTC has responded by creating a whole Market Intelligence branch. We talked about how regulators can attract top talent into these kinds of roles. They have appointed a Chief Market Intelligence Officer who is a former partner from Goldman Sachs, and they converted a University of Chicago professor from being a skeptic to a believer who now encourages his PhD students to consider working at an agency like the CFTC, because it is doing “cutting-edge work.” 

We also talked about the need for interagency coordination. The Chairman is one of the few people I know who doesn’t think we have too many federal financial agencies, but he emphasizes that they have to work together more than ever. He says he and SEC Chairman Clayton are focused on harmonizing rules, and he describes how the Commission is working with the Treasury Department (see my previous podcast with Counselor of the Secretary of the Treasury, Craig Phillips). 

As you listen, notice the tone of urgency that pervades this conversation. It’s a tone we don’t usually hear from regulators. It fits with the Chairman’s Georgetown Law School speech where he coined the term “agile regulation.” He talks about agencies spending months studying issues that, going forward, they will have to figure out in weeks. He says regulators are at risk of falling behind and that, in an era of exponential rates of change, “if you don't keep up... the falling behind moves at an exponential rate as well.” How to avoid that danger is the subject of today’s show.

Links

Barefoot Innovation Podcast: Counselor to the Secretary of the Treasury, Craig Phillips

Chairman Giancarlo’s Speech: “Quantitative Regulation:  Effective Market Regulation in a Digital Era”

Barefoot Innovation Podcast: From Analog to Digital Regulation - CFTC Acting Chairman Christopher Giancarlo

Barefoot Innovation Podcast: Regulatory Challenger: LabCFTC and Daniel Gorfine

LabCFTC

Mark Yallop interviewed in “The 25-year cycle of misconduct in financial markets and how to break it”


More for Our Listeners

Remember to leave us a five-star rating on your podcast platform so we can help more listeners find the show. Also come to our website to subscribe to Barefoot Innovation -- our newsletter, podcast and updates, and please follow me on Twitter, LinkedIn, and Facebook.

We have great episodes coming up. We will talk with Karen Mills of Harvard Business School. This is our second show with Karen, too, and one we were eager to do because she has a new book out on fintech and small business. We recorded a fascinating show with Ida Rademacher of the Aspen Institute alongside Jamie Kalamarides of Prudential.  And we have one from London with the great Chris Skinner.

We also have a terrific conversation that we recorded from the expo hall at LendIt with the cofounders of Kabbage, Rob Frohwein and Kathryn Petralia.

If you’re interested in booking me to speak to your group, contact jay@provokemanagement.com

We’re into the summer quiet time on conferences, but I’ll hope to see you at these in the fall:

University of Michigan’s Central Bank of the Future Conference, October 2-3, Ann Arbor, MI

Money 2020, October 27-30, Las Vegas, NV -- I’ll be chairing the regulatory track again this year and also keynoting the day, which has been moved, happily, to Tuesday.

Last but not least, listen next time for our very special 100th episode of Barefoot Innovation.

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.